Property / Real Estate As An Investment

Commercial real estate (downtown offices) seem to start to show some serious cracks. With assets being sold for half what they were bought few years ago.

nypost.com

Zara billionaire Amancio Ortega has sold a NYC office building for $50M — a staggering 60% loss

Even fashion moguls can’t escape New York City’s office slump, and that’s certainly the case with 366 Madison Ave.
nypost.com nypost.com

Timeline and Market Outlook​

Rather than asking "when" commercial real estate will crash, industry experts suggest focusing on "how" the market will adjust. The consensus points to a prolonged period of adjustment rather than a sudden collapse:

2025: The current year is viewed as transitional, with the anticipated recovery is expected to be gradual. Many properties will face refinancing challenges, but extend-and-pretend strategies may delay widespread distress.

2026-2027: These years represent the peak of the maturity wall, when the most significant refinancing challenges will occur. This period is most likely to see increased distressed sales and property value adjustments.

Post-2027: Market observers expect more normalized conditions to return as the bulk of problematic loans work through the system.

press.hutfin.com

When Will Commercial Real Estate Crash? Market Risks & Recovery

When will commercial real estate crash? Explore 2025 market risks, debt challenges, and recovery prospects in this in-depth analysis.
press.hutfin.com press.hutfin.com
 
Interesting thread. A few of my friends in finance — and some of my more highly educated acquaintances — have taken the position that renting is often cheaper in the long run, and that the “single-family home as the ultimate investment” logic is just Boomer-era mythology.

Personally, I’ve always thought the steady appreciation of single-family homes was largely due to two things:
  1. Post-1960s population boom — more people, more demand for housing.
  2. Monetary expansion — the house as a hard asset holding its value as we printed absurd amounts of money.
That formula worked well for the last 50+ years. But moving forward? I’m not convinced it holds.

Population growth is collapsing in real time. Birth rates are shockingly low. (I was just in the labor & delivery wing of a major SoCal hospital — out of 200+ rooms, maybe 15 were occupied.) That’s a lagging indicator of the obvious: fewer people are getting married and having kids. Which means fewer households being formed, and a likely drop in long-term demand for suburban single-family homes.

We already have a case study for this theory: Japan. As its population contracted, rural areas emptied out and became borderline ghost towns. Cities like Tokyo densified, but the countryside was left behind.

In the U.S., I suspect some tourist-heavy markets will hold value thanks to Airbnb-style rentals. But let’s be honest — short-term rentals are already wrecking the character of family neighborhoods. Nobody with kids wants strangers racing through their cul-de-sac every weekend. (I’ve always been against short-term rentals on principle for this reason.)

Not to mention the fact that a 30-year fixed is a type of handcuffs to a location. And given the breakdown of our society at its current pace, is this something we want exposure to? Wouldn't it be better to have highly liquid capital, now more than ever.

Bottom line: I refuse to put myself on the razor’s edge of financial solvency just to buy a house. The math doesn’t math. And as an “investment”? I think a single-family home bought today might look a lot less promising in 30 years than Boomers think.
 
ThinTern said:
Interesting thread. A few of my friends in finance — and some of my more highly educated acquaintances — have taken the position that renting is often cheaper in the long run, and that the “single-family home as the ultimate investment” logic is just Boomer-era mythology.

Personally, I’ve always thought the steady appreciation of single-family homes was largely due to two things:
  1. Post-1960s population boom — more people, more demand for housing.
  2. Monetary expansion — the house as a hard asset holding its value as we printed absurd amounts of money.
That formula worked well for the last 50+ years. But moving forward? I’m not convinced it holds.

Population growth is collapsing in real time. Birth rates are shockingly low. (I was just in the labor & delivery wing of a major SoCal hospital — out of 200+ rooms, maybe 15 were occupied.) That’s a lagging indicator of the obvious: fewer people are getting married and having kids. Which means fewer households being formed, and a likely drop in long-term demand for suburban single-family homes.

We already have a case study for this theory: Japan. As its population contracted, rural areas emptied out and became borderline ghost towns. Cities like Tokyo densified, but the countryside was left behind.

In the U.S., I suspect some tourist-heavy markets will hold value thanks to Airbnb-style rentals. But let’s be honest — short-term rentals are already wrecking the character of family neighborhoods. Nobody with kids wants strangers racing through their cul-de-sac every weekend. (I’ve always been against short-term rentals on principle for this reason.)

Not to mention the fact that a 30-year fixed is a type of handcuffs to a location. And given the breakdown of our society at its current pace, is this something we want exposure to? Wouldn't it be better to have highly liquid capital, now more than ever.

Bottom line: I refuse to put myself on the razor’s edge of financial solvency just to buy a house. The math doesn’t math. And as an “investment”? I think a single-family home bought today might look a lot less promising in 30 years than Boomers think.
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Renting is clearly cheaper in the immediate short term.

Anyone who says it is cheaper in the long run really means it was cheaper from some recent point in the past, in a specific market.

For example, it was probably better to own with a low interest mortgage since 2020 than rent, but there must be at least somewhere in America where that wasn't true.

Renting probably beats owning in most places if you compare renting with buying in Sept 2024, but over what time period will this continue to be true? One more year? Three, five, ten?

I wouldn't discount the possibility of owning being better than renting a lot of the time.
 
Owining is better than renting. Unless you are living in a temporary place. If you rent you are completely at the mercy of landlord. When your rental is due to renew. The new rent can be whatever the landlord decides. Bank loans are different. They fluctuate less and are more stable. After you pay them. Theres no instability on the place you live. Except maybe property tax.

People should buy houses whenever they can and younger the better. Alway try to buy in city centers. They normally tend to hold value better. The older you get the loans get more expensive.

I wonder if all the commercial real estate will not be repurposed to residencial.
 
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